Correlation Between Dupont De and Nio

Can any of the company-specific risk be diversified away by investing in both Dupont De and Nio at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dupont De and Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dupont De Nemours and Nio Class A, you can compare the effects of market volatilities on Dupont De and Nio and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dupont De with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Nio.

Diversification Opportunities for Dupont De and Nio

-0.62

Correlation Coefficient

Dupont De  Nio

Excellent diversification

The 3 months correlation between Dupont and Nio is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and Dupont De is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dupont De Nemours are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Dupont De i.e., Dupont De and Nio go up and down completely randomly.

Pair Corralation between Dupont De and Nio

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.4 times more return on investment than Nio. However, Dupont De Nemours is 2.52 times less risky than Nio. It trades about 0.02 of its potential returns per unit of risk. Nio Class A is currently generating about -0.06 per unit of risk. If you would invest  7,044  in Dupont De Nemours on January 26, 2024 and sell it today you would earn a total of  352.00  from holding Dupont De Nemours or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Nio Class A

Dupont De Nemours

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nio Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nio Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dupont De and Nio

The main advantage of trading using opposite Dupont De and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Nio can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nio will offset losses from the drop in Nio's long position.

The idea behind Dupont De Nemours and Nio Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.